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Pharma major Cipla has registered a poor show (year-on-year) in the second quarter of 2018-19 due to weak operational performance in Europe, South Africa and its institutional business. The silver lining was its US operations, which delivered a reasonably good performance.
The company reported a 11 per cent decline in its consolidated net profit in the second quarter, to ₹377 crore, as against ₹423 crore reported in the same quarter last year. The modest show in its key domestic market was also a major reason for dragging down its financials. The consolidated net sales for the quarter came in at ₹4,012 crore ( ₹4,082 crore).
Flat growth
Sales from India, which contributed around 41 per cent of the Cipla’s overall revenues, remained almost unchanged y-o-y at ₹1,644 crore, mainly due to the high base on the back of GST-led inventory re-stocking, coupled with higher acute sales in the same quarter last year.
Notwithstanding that, the company had registered healthy performances in the domestic market over the last few quarters, driven by both prescription and generics businesses. The company retains its No.1 position in respiratory, urology and paediatrics, and now focuses on oncology and dermatology segments.
Ramping up US sales
Sales from North America, which accounts for 19 per cent of the overall sales, grew 25 per cent y-o-y, driven by product rationalisation and ramp-up of new launches. The company received seven approvals this quarter with limited competition products, including Atazanavir, Diclofenac gel and Albendazole. The company has a strong pipeline of pending abbreviated new drug applications (ANDA) in the US. Of the 256 ANDAs filed, many are limited-competition products and may help generate Para IV Filing opportunities, primarily in respiratory, oncology and dermatology. The company expects 20+ filings in FY19.
Sales from the South African region (accounts for 19 per cent of sales) fell by 18 per cent y-o-y during the quarter due to lower offtake in its institutional business. Continued pricing pressure and a challenging funding environment in these regions also impacted the business.
Operating profit stood at ₹753 crore during the quarter. Operating margin came in at 18.8 per cent during the quarter, 110 bps lower y-o-y, due to higher financial and other expenses.
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